Economic Crisis in the Russian Far East: Overdevelopment or Colonial Exploitation?

Abstract

This paper tests rival explanations of the root causes of economic crisis in the Russian Far East from the 1990s to the present day. One explanation predicts long-term decline in the region's population from the Soviet level ("overdevelopment"), whereas the other ("mismanagement" or "colonial exploitation") implies preservation of that level. Changes in population are seen as reflecting changes in employment structure, which in turn is viewed as shaped by labor demand in the local economy. The region's future economic specialization is deduced by economic geographic assessment of the current situation and international data on the relative size of various economic sectors affecting future labor demand. Journal of Economic Literature, Classification Numbers: 011,018, 020. 1 figure, 7 tables, 102 references. THE CRISIS AND ITS CAUSES T he focus of this paper is on one of Russia's eleven major economic regions, whereas the bulk of the research on the spatial dimensions of Russia's economy has focused on smaller entities, such as the 89 subjects of the Federation (krays, oblasts, autonomous okrugs, the Jewish Autonomous Oblast, and the cities of Moscow and St. Petersburg). These latter units (subjects) are referred to as "provinces" in the present study. The Far East is the only economic region that is consistently discussed in the literature as a unit, reflecting the sense that its 10 provinces (Fig. 1) share important characteristics. The Far East is also the only economic region that is coterminous with one of the seven federal districts created by Russian President Vladimir Putin in May 2000 (Rossiyskaya gazeta, May 16, 2000, pp. 1, 5). Economically, the Far East fared the worst of all of Russia's regions during the 1990s, seeing its fortunes transformed from serving as a magnet for in-migration to being the region with the largest out-migration (Table 1). Since the region's climate and other more or less fixed determinants of quality of life did not change, this turnaround implies a decline in real per capita income relative to the other regions. 'Department of Economics, Haverford College, Haverford, PA 19041-1392; email: vkontoro@haverford.edu. The author would like to thank anonymous referees, Michael Ellman, Richard Ericson, Philip Hanson, Peter Rutland, and Vladimir Shlapentokh for useful suggestions, and Luba Kontorovich for editing the paper. Some studies that purport to address the entire region, however, rely largely upon evidence from its most populous province, Primorskiy Kray (e.g., Thornton, 1995; Rozman, 1997). However, crime, an important element of the quality of life, appears to have increased in the Far East more than in any other region of Russia in the 1990s (Artyukhov, 1999, pp. 36-37). A detailed analysis of the causes of migration from the Far East can be found in Kontorovich (2000).